Financial advice- Self-invested personal pensions (SIPPs)

The self-invested personal pension (SIPP) itself is a pension wrapper that holds investments until you retire and start to draw a pension income.

SIPPs are designed for people who want to manage their own fund by dealing with, and switching, their investments when they choose. They may have higher charges than other personal pensions or stakeholder pensions. For these reasons, they are more suitable for large funds and for people who are experienced with investing.

With standard personal pension schemes, your investments are managed for you within the pooled fund you have chosen. SIPPs are a form of personal pension scheme that give you the freedom to choose and manage your own investments. Or you can employ and pay for an authorised investment manager to make the decisions for you.

Most SIPPs allow you to select from a range of assets, such as:

particular stocks and shares quoted on a recognised UK or overseas stock exchange;

  • government securities;
  • unit trusts;
  • investment trusts;
  • insurance company funds;
  • traded endowment policies;
  • deposit accounts with banks and building societies;
  • National Savings products; and
  • commercial property (such as offices, shops or factory premises).

This list is not exhaustive and different SIPP operators will offer different ranges of investment choices.

It’s unlikely that you will be able to invest directly in residential property within a SIPP. Residential property can’t be held directly in a SIPP with the tax advantages that usually accompany pension investments. But, subject to some conditions including restrictions on personal use, residential property may be held in a SIPP through collective investment vehicles, such as real estate investment trusts or property trusts, without losing the tax advantages. However, not all SIPP operators accept this type of investment.